We all want great investments, but most investors tend to search for stocks to buy in some dangerous places. Sizzling biotech stocks? The hottest new gadget stock?
That’s great if you can time them perfectly, but let’s be honest — at that point, that’s a swing trade, not an investment.
Altogether too often, these headline-heavy stocks end up burning out for people who bought right before the hype turned to dust. Yes, some people make money on these stocks, but others … well, remember the dot-com bust?
You know what does make a great investment? Boring. If you make aluminum cans, own millions of acres of trees or distribute dental supplies, no one will want to talk to you about your job, but everyone should have you on their short list of stocks to buy. The blander the better!
So if you’re hunting down great investments for the long-term, remember: boring is beautiful. Because boring typically produces long histories of paying dividends, wide moats and consistent sales. That tends to result not just in growth for the long haul, but steady growth — gains you don’t have to worry will evaporate if an iPhone flops.
So forget “millennial stocks” and action cameras, and instead grab a few yawners. Here are seven of the most bland-but-beautiful stocks to buy.
Bland but Beautiful Stocks to Buy: Snap-on (SNA)
Selling screwdrivers, wrenches and other hand tools may not seem that exciting, but that’s what makes it a great investment.
Snap-On Incorporated (SNA) manufactures a variety of tools, equipment and repair information systems for grease monkeys worldwide. Many mechanics swear by Snap-on’s better-made products. And with a simple socket wrench set costing nearly $300, SNA isn’t exactly going after the small-time here.
Snap-on also isn’t a one-trick pony.
As automotive manufacturers have added a host of computer systems to cars and trucks, Snap-on has met the challenge head-on. The firm has launched a variety of high-tech automotive diagnostics equipment. These expensive, high-margin products are quickly becoming the standard in every garage across the nation.
Snap-on also has benefited from steady growth in its industrial business. Areas such as energy, aerospace and heavy construction need strong tools that won’t fail during critical applications. SNA delivers on that need.
What you get is a stock that has delivered quarterly cash dividends without interruption or reduction since 1939. Moreover, SNA has roughly doubled its dividend in the past five years.
It’s true: Socket wrenches make great investments.
Bland but Beautiful Stocks to Buy: Cincinnati Financial (CINF)
Talking about insurance is as exciting as watching paint dry. But for investors in Cincinnati Financial Corporation (CINF), insurance is anything but boring.
The property casualty insurer continues to hit out of the park with respect to earnings, cash flows and dividends.
To start with, Cincinnati Financial’s prowess comes down to its float. An insurance company’s float is basically all the premiums it has collected but hasn’t paid out yet. This money can be invested in a wide range of things; most insurance companies look to bonds and other fixed-income instruments.
Not CINF. Cincinnati Financial has plowed a hefty amount of its float into common stock. And the extra gains from its stock portfolio (which, by the way, is invested in plenty of bland beauties itself) has helped the company deliver solid results.
Cincinnati Financial also has focused on new markets and businesses. Expanded efforts in reinsurance — basically insurance for insurance companies — have juiced earnings in recent quarters. So have recent expansions into high-end markets in New Jersey.
In turn, CINF has the financial backing to be a dividend-paying machine. This stock is a Dividend Aristocrat that has paid and raised its quarterly distribution annually for 55 consecutive years.
Bland but Beautiful Stocks to Buy: Ball Corporation (BLL)
When people pick up a soda or beer can, they mostly focus on the tasty liquid inside.
You should be focusing on the can itself. After all, that aluminum is worth more than the 5-cent recycling fee — at least if you own shares of Ball Corporation (BLL).
BLL makes and sells cans. A lot of boring, tired cans. All told, it produces about $8 billion worth of cans around the world. Standard soda cans, aerosol paint cans, specialty tins for the U.S. military. It’s a boring niche, but Ball happens to be the largest player, and it has an enormous moat.
And that moat is about to get even wider.
Ball has offered to buy out its chief rival Rexam, and the combined entity will be the far and away the largest producer of beverage cans. Even better is that regulators have pretty much approved the deal, and BLL has already found a steady stream of bidders for assets needed to be sold to clear antitrust concerns.
For investors, that clears the way for continued dividends and earnings into the future.
Bland but Beautiful Stocks to Buy: Weyerhaeuser (WY)
There’s nothing that’ll put you to sleep more than resting on a hammock on a breezy day in the middle of the woods.
Well, Weyerhaeuser Co (WY) has about 20 million acres’ worth of that.
WY is the nation’s largest timber real estate investment trust and land owner outside of the U.S. government. There’s nothing screamingly interesting about that focus, but it is profitable. Weyerhaeuser sits back and harvests logs when pricing is right. If prices are low, WY literally just sits there and watches the trees grow.
As a result, timber has pretty bond-like annual returns in the 2% to 4% range, and timberland has appreciated faster than rates of inflation.
Funnily enough, Weyerhaeuser decided it just had too much excitement on its plate, so it separated its homebuilding division a few years ago, and more recently, it agreed to sell its pulp/paper operations to International Paper Co (IP). That will basically make it 100% focused on managing and owning timberlands.
That should also remove the lumpiness of paper sales from WY’s bottom line, which in turn should help the company’s dividend over the long haul. Not that it needed the help — Weyerhaueser has more than doubled its dividend since becoming a REIT in 2011.
Bland but Beautiful Stocks to Buy: Patterson Companies (PDCO)
When it comes to healthcare, investors tend to focus on the hottest biotech startup or medical device company.
Wrong move if you want something that’ll last.
Patterson Companies (PDCO) is the largest supplier of products for dentists and veterinarians and offers more than 249,000 products across its catalog. That includes plenty of one-time-use consumables like face masks, vaccines and filling composites.
These items keep dentists and vets coming back to PDCO to fill their supply closets, and they fill Patterson’s pocket book right back.
PDCO also has plenty of growth in store. The company continues to add high-tech imaging, 3D printing and other imaging/diagnostic equipment to its product mix. These higher-margin items compliment the steady-Eddie nature of providing exam gloves.
Since its modern formation back in 2011, Patterson has been returning more of its cash to shareholders each year through both dividends and buybacks. That should continue well into the future as its high-tech offerings pay off, making PDCO one of the best boring stocks to buy for the long haul.
Bland but Beautiful Stocks to Buy: Waste Management (WM)
Americans tend not to think about what happens to their garbage when they place their cans on the curb. Well, the set-it-and-forget-it realm of waste removal is worth $100 billion per year.
And Waste Management, Inc. (WM) is king.
As the nation’s largest garbage collector, Waste Management’s moat is huge. It’s extremely difficult to enter the waste services industry thanks to high barriers to entry and regulation. If you or I wanted to go open a landfill and start a trash-hauling operation, we’d be hard-pressed to do so — not to mention, most people don’t want to go open a landfill and start a trash-hauling operation!
With that in mind, Waste Management’s nearly 140 landfills, numerous transfer centers and recycling facilities give it enormous clout that only a few rivals can touch.
WM also benefits from a unique pricing mechanism that provides it with steady cash flows. Consumers are basically stuck with their garbage provider based on what a municipality or neighbor chooses. Secondly, unlike an electricity bill — which can be reduced if they use less energy — consumers are locked into that price for hauling regardless of it they make a lot or a little garbage each week.
Waste Management has turned that into a pretty nice dividend that currently yields 2.7%.
Bland but Beautiful Stocks to Buy: Flowserve (FLS)
Building pumps are enthralling, right?
Don’t be fooled. Flowserve Corp (FLS) is an exciting stock buried within the guise of a boring old industrial manufacturer.
The key is who buys Flowserve’s pumps.
Flowserve sits at the forefront of several major game-changing industries. The company is one of the leading producers of pumps for water treatment and desalination plants. Well, water scarcity continues to be a huge concern for the planet and Flowserve makes all the products needed to move that H2O around.
In addition, FLS has recently begun to add energy recovery products to mix to help reduce the heavy costs associated with water treatment. Secondly, the firm has continued to expand into the energy industry. While it does offer some fracking products, the vast bulk of Flowserve’s pumps are designed to move oil and natural gas through pipelines chemical refining facilities. That makes the stock a play on rising energy production without taking on producer risk.
At the of the day, you get a firm that has plenty of boring attributes, but still offers a chance for continued growth and dividend increases.
As of this writing, Aaron Levitt was long WY.